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RASKIN v. FIRST FED. S&L ASSN. OF ERIE

March 21, 1974

Howard L. RASKIN
v.
FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF ERIE v. The BRADFORD GROUP, INC. and Midland Mortgage Company


Knox, District Judge.


The opinion of the court was delivered by: KNOX

There is again before the court a diversity case in which the federal court is called upon to decide the meaning and application of the new Pennsylvania Long Arm Statute, (Act of November 15, 1972, effective ninety days thereafter, 42 P.S. § 8309,) in the absence of any guiding decision by the Pennsylvania Supreme Court with respect to the question now before us.

 This case involves a suit by the plaintiff, a citizen of Tulsa, Oklahoma, against First Federal Savings and Loan Association of Erie, Pennsylvania (First Federal) a Federal Savings and Loan Association with its principal offices in the City of Erie, Erie County, alleging that First Federal breached a contract of commitment to lend money upon a mortgage for financing a large furniture retail store and warehouse in Birmingham, Alabama. Plaintiff claims that as a result of the breach of agreement by First Federal, he has suffered various damages.

 First Federal in turn claims that the real liability is that of the third party defendants, The Bradford Group, Inc. and Midland Mortgage Company, who had committed themselves to First Federal in connection with its commitment on this mortgage. Particularly, it is alleged that The Bradford Group, a nationwide mortgage broker, sought to induce First Federal to enter into the commitment by agreeing to sell participations in the mortgage to other institutions up to fifty percent of the principal amount. It is averred that Bradford had contacted First Federal and induced First Federal to make its commitment with Midland Mortgage in reliance upon Bradford's agreement to secure participations. First Federal claims that Bradford Group and Midland Mortgage then breached their contracts and commitments to First Federal as the result of which First Federal was unable to fulfill its commitment to the plaintiff and therefore the third party defendants are liable to First Federal for any sums of damages that may be adjudged against it in favor of the plaintiff.

 There has been preliminary skirmishing with respect to the methods of service but it now appears that service was finally accomplished in accordance with Pennsylvania law as to foreign corporations, but the third party defendants now claim that they are not subject to the Pennsylvania Long Arm Statute above cited and that therefore this federal court is without jurisdiction of the third party claims of the original defendant against them. Hence, they file motions to dismiss which are now before the court.

 In passing upon this question, we must first consider the exact language of the new Long Arm Statute.

 
" Acts affecting jurisdiction
 
(a) General rule. -- Any of the following shall constitute 'doing business' for the purposes of this chapter:
 
(1) The doing by any person in this Commonwealth of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object.
 
(2) The doing of a single act in this Commonwealth for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object with the intention of initiating a series of such acts.
 
* * *
 
(b) Exercise of full constitutional power over foreign corporations. -- In addition to the provisions of subsection (a) of this section the jurisdiction and venue of courts of the Commonwealth shall extend to all foreign corporations and the powers exercised by them to the fullest extent allowed under the Constitution of the United States.
 
(c) Exception. -- Notwithstanding any other provision of this section, for the purposes of determining jurisdiction of courts within this Commonwealth, inspecting, appraising and acquiring real estate and mortgages, and other liens thereon, and personal property and security interest therein, and holding, leasing away, conveying and transferring the same, as fiduciary or otherwise, or collecting debts and enforcing mortgages and rights in property securing the same by any foreign corporation shall not constitute 'doing business. '" 1972, Nov. 15, P.L. [*], No. 271, § 8309, eff. in 90 days.

 It is obvious that in general the Pennsylvania Legislature intended by the enactment of this statute to exercise jurisdiction and venue over all foreign corporations to "the fullest extent allowed under the Constitution of the United States", and to push back the perimeters of Pennsylvania's jurisdiction over foreign corporations incurring liabilities in Pennsylvania, the previous attempts of the Pennsylvania Legislature having been frustrated by a series of limiting decisions by the court. See the decision of this court in Knapp v. Franklin Coach Co., et al., 365 F. Supp. 305 (D.C. 1973). The court of appeals for this circuit in Gorso v. Bell Equipment Corporation, 476 F.2d 1216 reversed the decision of this court in 330 F. Supp. 834 (W.D. Pa. 1971) with respect to service under prior law involving a single isolated incident involving the shipment of a piece of machinery through the stream ...


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